WDC and KKR have submitted a fresh bid for beleaguered Toshiba's memory business, in competition with the preferred INCJ/Bain/SK Hynix bid.
The memory business includes a joint venture between WDC and Toshiba to make flash chips at foundries in Japan. Toshiba is selling its memory business in an auction to recoup from company survival-threatening losses in its US nuclear power station building business.
It had selected a preferred bid, in the ¥2 trillion ($18bn) area, from the Japanese state-backed INCJ (Innovation Network Corp of Japan) fund, private equity firm Bain, some Japanese banks, and with some financing from Korean memory and NAND chipster SK Hynix, a competitor to WDC.
WDC had objected to Toshiba's sale of its stake in their flash foundry joint venture and taken Toshiba to an international arbitration court plus filing an injunction to halt the sale. This legal pressure had worried the preferred bid group and the Japanese government, leading them to encourage Toshiba to get the WDC situation sorted out.
Tomorrow is Toshiba's annual shareholders' meeting and it had wanted the situation cleared up in principle by then.
The overall deal needs to be complete by the end of March next year to meet Tokyo stock exchange deadlines concerning Toshiba's negative shareholders' equity. To try to prevent regulatory reviews delaying completion of the bid, WDC's contribution is structured as debt-financing and not equity ownership. Private equity house KKR will have the equity and thus control.
A WDC statement said: "On June 26, Western Digital resubmitted a bid with KKR where Western Digital will provide debt financing to facilitate a sale by Toshiba Corporation of its interests in the NAND Flash Memory joint ventures."
There was anodyne stuff about Western Digital continuing "to believe it is the best partner to advance Toshiba’s legacy of technology innovation in Japan." Yeah, yeah.
The INCJ was in a previous bid consortium that included WDC and failed to get Toshiba's approval. Reuters reports no comments were forthcoming from any of the companies involved.
Whether WDC and Bain's latest bid in this tortuous affair will succeed is anyone's guess. ®